As previously explained in our August 15, 2019 newsletter, Revenu Québec announced new rules on May 17, 2019 requiring the disclosure of all nominee agreements. The application of those rules was suspended until regulations could be adopted. Bill 42 implementing these rules was made final on September 24, 2020, and those rules are now in effect (An Act to give effect to fiscal measures announced in the Budget Speech delivered on 21 March 2019 and to various other measures, SQ 2020, c 16).
Whether or not they already had to be disclosed to Revenu Québec in the provincial corporate income tax return (CO-17-T), ALL Québec taxpayers must now disclose ALL nominee agreements that fall into the following two categories:
- All nominee agreements signed on or after May 17, 2019, which must be disclosed within the earlier of (i) December 23, 2020 and (ii) 90 days from the date of signature; and
- All nominee agreements signed before May 17, 2019 but which have income tax consequences that continue after that date (for example, as to the deduction of expenses, the attribution of rental income, the imposition of a capital gain, claiming the principal residence exemption, etc.), which must be disclosed by or before December 23, 2020.
Nominee agreements signed before May 17, 2019 which do not have any continuing tax consequences after that date do not need to be disclosed under these new rules.
The disclosure must be made by completing and filing form TP-1079.PN. The information to be disclosed includes the date of the nominee agreement, the identity of all the parties, a full description of the transaction (or the series of transactions) covered by the nominee agreement and the identity of any person or entity for which there are resulting tax consequences, as well as a copy of any written document setting out the arrangement. Disclosure by any party to the nominee agreement covers all parties to it.
Failure to disclose your nominee agreement can result in an initial penalty of $1,000 plus an additional daily penalty of $100 (up to a maximum total penalty of $5,000). As well, Revenu Québec can suspend your tax assessment period, which means that prescription does not begin to run on its tax claims against you.
For more information on these new rules, and for assistance in preparing the required disclosure materials, please contact one of our following professionals:
| Martin Lord | mlord@rsslex.com | 514 393-4041 |
| Sharon G. Druker | sgdruker@rsslex.com | 514 393-4014 |
| Geneviève Goulet | ggoulet@rsslex.com | 514 393-7422 |
